The Securities and Exchange Commission (SEC), the top U.S. financial regulator, said Friday that it is reviewing recent trading volatility that led to the rise of GameStop, AMC, and others.
The agency said it would protect retail investors and promised to investigate actions taken by hedge funds and brokerages that might “disadvantage investors or otherwise unduly inhibit their ability to trade certain securities.”
“We will act to protect retail investors when the facts demonstrate abusive or manipulative trading activity that is prohibited by the federal securities laws,” the SEC said in a news release.
“The Commission is working closely with our regulatory partners, both across the government and at FINRA and other self-regulatory organizations, including the stock exchanges, to ensure that regulated entities uphold their obligations to protect investors and to identify and pursue potential wrongdoing,” the regulator added. FIRNA refers to the Financial Industry Regulatory Authority.
As of Friday, GameStop was up to $320 per share, which is up more than 400 percent. Other stocks like AMC and KOSS are up 1,800 percent and 280 percent, respectively.
On Thursday, after trading platform Robinhood and others moved to restrict access to purchasing GameStop, AMC, and others, users protested and complained. Right-wing and left-wing figures and officials criticized the move.
Robinhood said on its website after the PR fracas that it was easing some trading restrictions, but it was still not allowing purchases of fractional shares in GameStop and about 12 other companies.
In one victory for the retail pack, short-seller Andrew Left, who runs Citron Research and sparked the slugfest with his call against GameStop, said in a YouTube video that his company would no longer publish short-selling research.
Users on the Reddit forum WallStreetBets on Friday continued to push GameStop and AMC. GameStop, AMC, and others like American Airlines Group Inc all have high “short” interest ratios, making them subject to a squeeze on funds that have bet on the shares falling.
Rep. Patrick McHenry (R-N.C.), the ranking member of the House Financial Services Committee, said Friday morning in a televised interview that he’s worried about unequal access to capital markets.
“What I’m seeing here is this larger case, which is: Average, everyday investors are cut off from the access that insiders like c-suite members of companies, and hedge funds and private equity naturally get,” he said. “And that the credit-investor standard has bifurcated our markets into a highly prosperous lie.”
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